While there are diverse opinions on exactly how the retirement industry will change over the next five years, nearly everyone agrees that changes in technology and provider consolidation will shape the DC market of the second half of the decade.
Writing in the most recent issue of NAPA Net the Magazine, NAPA Ambassador Fred Barstein notes that plan advisors will need to elect whether to join big firms (and big accounts), or to remain small and outsource much of their administrative work. Advisors stuck in the middle, he writes, “will surely be squeezed by better capitalized and more efficient larger competitors."
With the market getting more competitive, advisors cannot afford to focus a significant amount of their time on marketing or outreach efforts, necessitating their move to a larger firm with support staff. According to Pensionmark’s Troy Hammond, whose firm grew from 26 offices to 40 in in 2014, “There’s a growing demand and awareness that advisors need to focus more on revenue-generating activity, such as client-facing and prospecting, rather than process.”
Technological changes are already requiring advisors to be more accessible to their clients, and the next five years should see deflated advisor fees and even more transparency. However, Barstein adds, advisors who show exceptionally high value will still attract a market that will be pay more for better results.
Barstein predicts that advisors will need to be able to adapt to plans of all sizes, while focusing on growing firms to both adequately serve clients and grow the business, while utilizing technology to better serve more plans. It’s already a hyper-competitive market, which Barstein says is one thing that won’t change anytime soon.
To view the article, visit the NAPA Net the Magazine features page and click on “The Practice of the Future” under the “Inside the Retirement Industry” heading.
